INCOTERMS 2000: ICC OFFICIAL RULES FOR THE INTERPRETATION OF TRADE TERMS

Size: px
Start display at page:

Download "INCOTERMS 2000: ICC OFFICIAL RULES FOR THE INTERPRETATION OF TRADE TERMS"

Transcription

1 1. PURPOSE AND SCOPE OF INCOTERMS INTRODUCTION The purpose of Incoterms is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. Thus, the uncertainties of different interpretations of such terms in different countries can be avoided or at least reduced to a considerable degree. Frequently, parties to a contract are unaware of the different trading practices in their respective countries. This can give rise to misunderstandings, disputes and litigation with all the waste of time and money that this entails. In order to remedy these problems the International Chamber of Commerce first published in 1936 a set of international rules for the interpretation of trade terms. These rules were known as "Incoterms 1936". Amendments and additions were later made in 1953, 1967, 1976, 1980, 1990 and presently in 2000 in order to bring the rules in line with current international trade practices. It should be stressed that the scope of Incoterms is limited to matters relating to the rights and obligations of the parties to the contract of sale with respect to the delivery of goods sold (in the sense of "tangibles", not including "intangibles" such as computer software). It appears that two particular misconceptions about Incoterms are very common. First, Incoterms are frequently misunderstood as applying to the contract of carriage rather than to the contract of sale. Second, they are sometimes wrongly assumed to provide for all the duties which parties may wish to include in a contract of sale. As has always been underlined by ICC, Incoterms deal only with the relation between sellers and buyers under the contract of sale, and, moreover, only do so in some very distinct respects. While it is essential for exporters and importers to consider the very practical relationship between the various contracts needed to perform an international sales transaction - where not only the contract of sale is required, but also contracts of carriage, insurance and financing - Incoterms relate to only one of these contracts, namely the contract of sale. Nevertheless, the parties' agreement to use a particular Incoterm would necessarily have implications for the other contracts. To mention a few examples, a seller having agreed to a CFR - or CIF -contract cannot perform such a contract by any other mode of transport than carriage by sea, since under these terms he must present a bill of lading or other maritime document to the buyer which is simply not possible if other modes of transport are used. Furthermore, the document required under a documentary credit would necessarily depend upon the means of transport intended to be used. Second, Incoterms deal with a number of identified obligations imposed on the parties - such as the seller's obligation to place the goods at the disposal of the buyer or hand them over for carriage or deliver them at destination - and with the distribution of risk between the parties in these cases. Further, they deal with the obligations to clear the goods for export and import, the packing of the goods, the buyer's obligation to take delivery as well as the obligation to provide proof that the respective obligations have been duly fulfilled. Although Incoterms are extremely important for the implementation of the contract of sale, a great number of problems which may occur in such a contract are not dealt with at all, like transfer of ownership and other property rights, breaches of contract and the consequences following from such breaches as well as exemptions from liability in 1

2 certain situations. It should be stressed that Incoterms are not intended to replace such contract terms that are needed for a complete contract of sale either by the incorporation of standard terms or by individually negotiated terms. Generally, Incoterms do not deal with the consequences of breach of contract and any exemptions from liability owing to various impediments. These questions must be resolved by other stipulations in the contract of sale and the applicable law. Incoterms have always been primarily intended for use where goods are sold for delivery across national boundaries: hence, international commercial terms. However, Incoterms are in practice at times also incorporated into contracts for the sale of goods within purely domestic markets. Where Incoterms are so used, the A2 and B2 clauses and any other stipulation of other articles dealing with export and import do, of course, become redundant. 2. WHY REVISIONS OF INCOTERMS? The main reason for successive revisions of Incoterms has been the need to adapt them to contemporary commercial practice. Thus, in the 1980 revision the term Free Carrier (now FCA) was introduced in order to deal with the frequent case where the reception point in maritime trade was no longer the traditional FOB-point (passing of the ship's rail) but rather a point on land, prior to loading on board a vessel, where the goods were stowed into a container for subsequent transport by sea or by different means of transport in combination (so-called combined or multimodal transport). Further, in the 1990 revision of Incoterms, the clauses dealing with the seller's obligation to provide proof of delivery permitted a replacement of paper documentation by EDI-messages provided the parties had agreed to communicate electronically. Needless to say, efforts are constantly made to improve upon the at the seller's own premises (the «E»-term Ex works); followed by the drafting and presentation of Incoterms in order to facilitate their practical implementation. 3. INCOTERMS 2000 During the process of revision, which has taken about two years, ICC has done its best to invite views and responses to successive drafts from a wide ranging spectrum of world traders, represented as these various sectors are on the national committees through which ICC operates. Indeed, it has been gratifying to see that this revision process has attracted far more reaction from users around the world than any of the previous revisions of Incoterms. The result of this dialogue is Incoterms 2000, a version which when compared with Incoterms 1990 may appear to have effected few changes. It is clear, however, that Incoterms now enjoy world wide recognition and ICC has therefore decided to consolidate upon that recognition and avoid change for its own sake. On the other hand, serious efforts have been made to ensure that the wording used in Incoterms 2000 clearly and accurately reflects trade practice. Moreover, substantive changes have been made in two areas: the customs clearance and payment of duty obligations under FAS and DEQ; the loading and unloading obligations under FCA. All changes, whether substantive or formal have been made on the basis of thorough research among users of Incoterms and particular regard has been given to queries received since 1990 by the Panel of Incoterms Experts, set up as an additional service to the users of Incoterms. 2

3 4. INCORPORATION OF INCOTERMS INTO THE CONTRACT OF SALE In view of the changes made to Incoterms from time to time, it is important to ensure that where the rties intend to incorporate Incoterms into their contract of sale, an express reference is always made to current version of Incoterms. This may easily be overlooked when, for example, a reference has been de to an earlier version in standard contract forms or in order forms used by merchants. A failure to er to the current version may then result in disputes as to whether the parties intended to incorporate t version or an earlier version as a part of their contract. Merchants wishing to use Incoterms 2000 ould therefore clearly specify that their contract is governed by "Incoterms 2000". 5. THE STRUCTURE OF INCOTERMS In 1990, for ease of understanding, the terms were grouped in four basically different categories; namely starting with the term whereby the seller only makes the goods available to the buyer at the seller's own premises (the "E" term Ex works); followed by the second group whereby the seller is called upon to deliver the goods to a carrier appointed by the buyer (the "F" terms FCA, FAS and FOB); continuing with the "C" terms where the seller has to contract for carriage, but without assuming that risk of loss of or damage to the goods or additional costs due to events occurring after shipment and dispatch (CFR, CIF, CPT and CIP) and, finally the "D" terms whereby the seller has to bear all costs and risks needed to bring the goods to the place of destination (DAF, DES, DEQ, DDU and DDP). The following chart sets out this classification of the trade terms. Group E Departure EXW Ex Works Group F Main carriage unpaid FCA Free Carrier (... named place) FAS Free Alongside Ship (...named port of shipment) FOB Free On Board (... named port of shipment) Group C Main carriage paid CFR Cost and Freight (... named port of destination) CIF Cost, Insurance and Freight (... named port of destination) CPT Carriage Paid To (... named place of destination) CIP Carriage and Insurance Paid To (... named place of destination) Group D Arrival DAF Delivered At Frontier (... named place) DES Delivered Ex Ship (... named port of destination) DEQ Delivered Ex Quay (... named port of destination) DDU Delivered Duty Unpaid (... named place of destination) DDP Delivered Duty Paid (... named place of destination) Further, under all terms, as in Incoterms 1990, the respective obligations of the parties have been grouped under 10 headings where each heading on the seller's side «mirrors» the position of the buyer with respect to the same subject matter. 3

4 6. TERMINOLOGY While drafting Incoterms 2000, considerable efforts have been made to achieve as much consistency as possible and desirable with respect to the various expressions used throughout the thirteen terms. Thus, the use of different expressions intended to convey the same meaning has been avoided. Also, whenever possible, the same expressions as appear in the 1980 UN Convention on Contracts for the International Sale of Goods (CISG) have been used. "shipper" In some cases it has been necessary to use the same term to express two different meanings simply because there has been no suitable alternative. Traders will be familiar with this difficulty both in the context of contracts of sale and also of contracts of carriage. Thus, for example, the term «shipper» signifies both the person handing over the goods for carriage and the person who makes the contract with the carrier: however, these two «shippers» may be different persons, for example under a FOB contract where the seller would hand over the goods for carriage and the buyer would make the contract with the carrier. "delivery" It is particularly important to note that the term «delivery» is used in two different senses in Incoterms. First, it is used to determine when the seller has fulfilled his delivery obligation which is specified in the A4 clauses throughout Incoterms. Second, the term «delivery» is also used in the context of the buyer's obligation to take or accept delivery of the goods, an obligation which appears in the B4 clauses throughout Incoterms. Used in this second context, the word "delivery" means first that the buyer "accepts" the very nature of the "C"-terms, namely that the seller fulfils his obligations upon the shipment of the goods and, second that the buyer is obliged to receive the goods. This latter obligation is important so as to avoid unnecessary charges for storage of the goods until they have been collected by the buyer. Thus, for example under CFR and CIF contracts, the buyer is bound to accept delivery of the goods and to receive them from the carrier and if the buyer fails to do so, he may become liable to pay damages to the seller who has made the contract of carriage with the carrier or, alternatively, the buyer might have to pay demurrage charges resting upon the goods in order to obtain the carrier's release of the goods to him. When it is said in this context that the buyer must "accept delivery", this does not mean that the buyer has accepted the goods as conforming with the contract of sale, but only that he has accepted that the seller has performed his obligation to hand the goods over for carriage in accordance with the contract of carriage which he has to make under the A3 a) clauses of the "C"-terms. So, if the buyer upon receipt of the goods at destination were to find that the goods did not conform to the stipulations in the contract of sale, he would be able to use any remedies which the contract of sale and the applicable law gave him against the seller, matters which, as has already been mentioned, lie entirely outside the scope of Incoterms. Where appropriate, Incoterms 2000, have used the expression «placing the goods at the disposal of» the buyer when the goods are made available to the buyer at a particular place. This expression is intended to bear the same meaning as that of the phrase "handing over the goods" used in the 1980 United Nations Convention on Contracts for the International Sale of Goods. "usual" The word "usual" appears in several terms, for example in EXW with respect to the time of delivery 4

5 (A4) and in the "C"-terms with respect to the documents which the seller is obliged to provide and the contract of carriage which the seller must procure (A8, A3). It can, of course, be difficult to tell precisely what the word "usual" means, however, in many cases, it is possible to identify what persons in the trade usually do and this practice will then be the guiding light. In this sense, the word "usual" is rather more helpful than the word "reasonable", which requires an assessment not against the world of practice but against the more difficult principle of good faith and fair dealing. In some circumstances it may well be necessary to decide what is "reasonable". However, for the reasons given, in Incoterms the word "usual" has been generally preferred to the word "reasonable". "charges" With respect to the obligation to clear the goods for import it is important to determine what is meant by «charges» which must be paid upon import of the goods. In Incoterms 1990 the expression «official charges payable upon exportation and importation of the goods» was used in DDP A6. In Incoterms 2000 DDP A6 the word «official» has been deleted, the reason being that this word gave rise to some uncertainty when determining whether the charge was «official» or not. No change of substantive meaning was intended through this deletion. The «charges» which must be paid only concern such charges as are a necessary consequence of the import as such and which thus have to be paid according to the applicable import regulations. Any additional charges levied by private parties in connection with the import are not to be included in these charges, such as charges for storage unrelated to the clearance obligation. However, the performance of that obligation may well result in some costs to customs brokers or freight forwarders if the party bearing the obligation does not do the work himself. "ports", "places", "points" and "premises" So far as concerns the place at which the goods are to be delivered, different expressions are used in Incoterms. In the terms intended to be used exclusively for carriage of goods by sea -such as FAS, FOB, CFR, CIF, DES and DEQ - the expressions «port of shipment» and «port of destination» have been used. In all other cases the word «place» has been used. In some cases, it has been deemed necessary also to indicate a «point» within the port or place as it may be important for the seller to know not only that the goods should be delivered in a particular area like a city but also where within that area the goods should be placed at the disposal of the buyer. Contracts of sale would frequently lack information in this respect and Incoterms therefore stipulate that if no specific point has been agreed within the named place, and if there are several points available, the seller may select the point which best suits his purpose (as an example see FCA A4). Where the delivery point is the seller's "place" the expression «the seller's premises» (FCA A4) has been used. "ship" and "vessel" In the terms intended to be used for carriage of goods by sea, the expressions «ship» and «vessel» are used as synonyms. Needless to say, the term «ship» would have to be used when it is an ingredient in the trade term itself such as in «free alongside ship» (FAS) and «delivery ex ship» (DES). Also, in view of the traditional use of the expression «passed the ship's rail» in FOB, the word «ship» has had to be used in that connection. "checking" and "checking" In the A9 and B9 clauses of Incoterms the headings «checking -packaging and marking» and «inspection of the goods» respectively have been used. Although the words «checking» and «inspection» are synonyms, it has been deemed appropriate to use the former word with respect to the seller's delivery obligation under A4 and to reserve the latter for the particular case when a «pre- 5

6 shipment inspection» is performed, since such inspection normally is only required when the buyer or the authorities of the export or import country want to ensure that the goods conform with contractual or official stipulations before they are shipped. 7. THE SELLER'S DELIVERY OBLIGATIONS Incoterms focus on the seller's delivery obligation. The precise distribution of functions and costs in connection with the seller's delivery of the goods would normally not cause problems where the parties have a continuing commercial relationship. They would then establish a practice between themselves («course of dealing») which they would follow in subsequent dealings in the same manner as they have done earlier. However, if a new commercial relationship is established or if a contract is made through the medium of brokers - as is common in the sale of commodities -, one would have to apply the stipulations of the contract of sale and. whenever Incoterms 2000 have been incorporated into that contract, apply the division of functions, costs and risks following therefrom. It would, of course, have been desirable if Incoterms could specify in as detailed a manner as possible the duties of the parties in connection with the delivery of the goods. Compared with Incoterms 1990, further efforts have been made in this respect in some specified instances (see for example FCA A4). But it has not been possible to avoid reference to customs of the trade in FAS and FOB A4 («in the manner customary at the port»), the reason being that particularly in commodity trade the exact manner in which the goods are delivered for carriage in FAS and FOB contracts vary in the different sea ports. 8. PASSING OF RISKS AND COSTS RELATING TO THE GOODS The risk of loss of or damage to the goods, as well as the obligation to bear the costs relating to the goods, passes from the seller to the buyer when the seller has fulfilled his obligation to deliver the goods. Since the buyer should not be given the possibility to delay the passing of the risk and costs, all terms stipulate that the passing of risk and costs may occur even before delivery, if the buyer does not take delivery as agreed or fails to give such instructions (with respect to time for shipment and/or place for delivery) as the seller may require in order to fulfil his obligation to deliver the goods. It is a requirement for such premature passing of risk and costs that the goods have been identified as intended for the buyer or, as is stipulated in the terms, set aside for him (appropriation). This requirement is particularly important under EXW, since under all other terms the goods would normally have been identified as intended for the buyer when measures have been taken for their shipment or dispatch («F» - and «C»-terms) or their delivery at destination («D»-terms). In exceptional cases, however, the goods may have been sent from the seller in bulk without identification of the quantity for each buyer and, if so, passing of risk and cost does not occur before the goods have been appropriated as aforesaid (cf. also article 69.3 of the 1980 United Nations Convention on Contracts for the International Sale of Goods). 9. THE TERMS 9.1 "E" - term is the term in which the seller's obligation is at its minimum: the seller has to do no more than place the goods at the disposal of the buyer at the agreed place - usually at the seller's own premises. On the other hand, as a matter of practical reality, the seller would frequently assist the buyer in loading the goods on the latter's collecting vehicle. Although EXW would better reflect this if the seller's obligations were to be extended so as to include loading, it was thought desirable to retain the traditional principle of the seller's minimum obligation under EXW so that it could be used for cases where the seller does not wish to assume any obligation whatsoever with respect to the loading of the goods. If the buyer wants the seller to do more, this should be made clear in the 6

7 contract of sale. 9.2 "F" - terms require the seller to deliver the goods for carriage as instructed by the buyer. The point at which the parties intend delivery to occur in the FCA term has caused difficulty because of the wide variety of circumstances which may surround contracts covered by this term. Thus, the goods may be loaded on a collecting vehicle sent by the buyer to pick them up at the seller's premises; alternatively, the goods may need to be unloaded from a vehicle sent by the seller to deliver the goods at a terminal named by the buyer. Incoterms 2000 take account of these alternatives by stipulating that, when the place named in the contract as the place of delivery is the seller's premises, delivery is complete when the goods are loaded on the buyer's collecting vehicle and, in other cases, delivery is complete when the goods are placed at the disposal of the buyer not unloaded from the seller's vehicle. The variations mentioned for different modes of transport in FCA A4 of Incoterms 1990 are not repeated in Incoterms The delivery point under FOB, which is the same under CFR and CIF, has been left unchanged in Incoterms 2000 in spite of a considerable debate. Although the notion under FOB to deliver the goods «across the ship's rail» nowadays may seem inappropriate in many cases, it is nevertheless understood by merchants and applied in a manner which takes account of the goods and the available loading facilities. It was felt that a change of the FOB-point would create unnecessary confusion, particularly with respect to sale of commodities carried by sea typically under charter parties. Unfortunately, the word «FOB» is used by some merchants merely to indicate any point of deliverysuch as «FOB factory», «FOB plant», «FOB Ex seller's works» or other inland points -thereby neglecting what the abbreviation means: Free On Board. It remains the case that such use of «FOB» tends to create confusion and should be avoided. There is an important change of FAS relating to the obligation to clear the goods for export, since it appears to be the most common practice to put this duty on the seller rather than on the buyer. In order to ensure that this change is duly noted it has been marked with capital letters in the preamble of FAS. 9.3 "C" - The «C»-terms require the seller to contract for carriage on usual terms at his own expense. Therefore, a point up to which he would have to pay transport costs must necessarily be indicated after the respective «C»-term. Under the CIF and CIP terms the seller also has to take out insurance and bear the insurance cost. Since the point for the division of costs is fixed at a point in the country of destination, the «C»-terms are frequently mistakenly believed to be arrival contracts, in which the seller would bear all risks and costs until the goods have actually arrived at the agreed point. However, it must be stressed that the «C»-terms are of the same nature as the «F»-terms in that the seller fulfils the contract in the country of shipment or dispatch. Thus, the contracts of sale under the «C»-terms, like the contracts under the «F»-terms, fall within the category of shipment contracts. It is in the nature of shipment contracts that, while the seller is bound to pay the normal transport cost for the carriage of the goods by a usual route and in a customary manner to the agreed place, the risk of loss of or damage to the goods, as well as additional costs resulting from events occurring after the goods having been appropriately delivered for carriage, fall upon the buyer. Hence, the «C»-terms are distinguishable from all other terms in that they contain two «critical» points, one indicating the point to which the seller is bound to arrange and bear the costs of a contract of carriage and another one for the allocation of risk. For this reason, the greatest caution must be observed when adding obligations of the seller to the «C»-terms which seek to extend the seller's responsibility beyond the aforementioned «critical» point for the allocation of risk. It is of the very essence of the «C»-terms 7

8 that the seller is relieved of any further risk and cost after he has duly fulfilled his contract by contracting for carriage and handing over the goods to the carrier and by providing for insurance under the CIF- and CIP-terms. The essential nature of the "C"-terms as shipment contracts is also illustrated by the common use of documentary credits as the preferred mode of payment used in such terms. Where it is agreed by the parties to the sale contract that the seller will be paid by presenting the agreed shipping documents to a bank under a documentary credit, it would be quite contrary to the central purpose of the documentary credit for the seller to bear further risks and costs after the moment when payment had been made under documentary credits or otherwise upon shipment and dispatch of the goods. Of course, the seller would have to bear the cost of the contract of carriage irrespective of whether freight is pre-paid upon shipment or is payable at destination (freight collect); however, additional costs which may result from events occurring subsequent to shipment and dispatch are necessarily for the account of the buyer. If the seller has to provide a contract of carriage which involves payment of duties, taxes and other charges, such costs will, of course, fall upon the seller to the extent that they are for his account under that contract. This is now explicitly set forth in the A6 clause of all "C"-terms. If it is customary to procure several contracts of carriage involving transhipment of the goods at intermediate places in order to reach the agreed destination, the seller would have to pay all these costs, including any costs incurred when the goods are transhipped from one means of conveyance to the other. If, however, the carrier exercised his rights under a transhipment -or similar clause - in order to avoid unexpected hindrances (such as ice, congestion, labour disturbances, government orders, war or warlike operations) then any additional cost resulting therefrom would be for the account of the buyer, since the seller's obligation is limited to procuring the usual contract of carriage. It happens quite often that the parties to the contract of sale wish to clarify the extent to which the seller should procure a contract of carriage including the costs of discharge. Since such costs are normally covered by the freight when the goods are carried by regular shipping lines, the contract of sale will frequently stipulate that the goods are to be so carried or at least that they are to be carried under «liner terms». In other cases, the word «landed» is added after CFR or CIF. However, it is advisable not to use abbreviations added to the «C»-terms unless, in the relevant trade, the meaning of the abbreviations is clearly understood and accepted by the contracting parties or under any applicable law or custom of the trade. In particular, the seller should not - and indeed could not, without changing the very nature of the «C»-terms - undertake any obligation with respect to the arrival of the goods at destination, since the risk of any delay during the carriage is borne by the buyer. Thus, any obligation with respect to time must necessarily refer to the place of shipment or dispatch, for example, «shipment (dispatch) not later than...». An agreement for example, «CFR Hamburg not later than...» is really a misnomer and thus open to different possible interpretations. The parties could be taken to have meant either that the goods must actually arrive at Hamburg at the specified date, in which case the contract is not a shipment contract but an arrival contract or, alternatively, that the seller must ship the goods at such a time that they would normally arrive at Hamburg before the specified date unless the carriage would have been delayed because of unforeseen events. It happens in commodity trades that goods are bought while they are at sea and that, in such cases, the word «afloat» is added after the trade term. Since the risk of loss of or damage to the goods would then, under the CFR- and CIF-terms, have passed from the seller to the buyer, difficulties of interpretation might arise. One possibility would be to maintain the ordinary meaning of the CFRand CIF-terms with respect to the allocation of risk between seller and buyer, namely that risk passes 8

9 on shipment: this would mean that the buyer might have to assume the consequences of events having already occurred at the time when the contract of sale enters into force. The other possibility would be to let the passing of the risk coincide with the time when the contract of sale is concluded. The former possibility might well be practical, since it is usually impossible to ascertain the condition of the goods while they are being carried. For this reason the 1980 United Nations Convention on Contracts for the International Sale of Goods article 68 stipulates that «if the circumstances so indicate, the risk is assumed by the buyer from the time the goods were handed over to the carrier who issued the documents embodying the contract of carriage». There is, however, an exception to this rule when «the seller knew or ought to have known that the goods had been lost or damaged and did not disclose this to the buyer». Thus, the interpretation of a CFR- or CIF-term with the addition of the word «afloat» will depend upon the law applicable to the contract of sale. The parties are advised to ascertain the applicable law and any solution which might follow therefrom. In case of doubt, the parties are advised to clarify the matter in their contract. In practice, the parties frequently continue to use the traditional expression C&F (or N and F, C+F). Nevertheless, in most cases it would appear that they regard these expressions as equivalent to CFR. In order to avoid difficulties of interpreting their contract the parties should use the correct Incoterm which is CFR, the only world-wide-accepted standard abbreviation for the term «Cost and Freight (... named port of destination)». CFR and CIF in A8 of Incoterms 1990 obliged the seller to provide a copy of the charterparty whenever his transport document (usually the bill of lading) contained a reference to the charterparty, for example, by the frequent notation «all other terms and conditions as per charterparty». Although, of course, a contracting party should always be able to ascertain all terms of his contract - preferably at the time of the conclusion of the contract - it appears that the practice to provide the charterparty as aforesaid has created problems particularly in connection with documentary credit transactions. The obligation of the seller under CFR and CIF to provide a copy of the charterparty together with other transport documents has been deleted in Incoterms Although the A8 clauses of Incoterms seek to ensure that the seller provides the buyer with «proof of delivery», it should be stressed that the seller fulfils that requirement when he provides the «usual» proof. Under CPT and CIP it would be the «usual transport document» and under CFR and CIF a bill of lading or a sea waybill. The transport documents must be «clean», meaning that they must not contain clauses or notations expressly declaring a defective condition of the goods and/or the packaging. If such clauses or notations appear in the document, it is regarded as «unclean» and would then not be accepted by banks in documentary credit transactions. However, it should be noted that a transport document even without such clauses or notations would usually not provide the buyer with incontrovertible proof as against the carrier that the goods were shipped in conformity with the stipulations of the contract of sale. Usually, the carrier would, in standardized text on the front page of the transport document, refuse to accept responsibility for information with respect to the goods by indicating that the particulars inserted in the transport document constitute the shipper's declarations and therefore that the information is only «said to be» as inserted in the document. Under most applicable laws and principles, the carrier must at least use reasonable means of checking the correctness of the information and his failure to do so may make him liable to the consignee. However, in container trade, the carrier's means of checking the contents in the container would not exist unless he himself was responsible for stowing the container. There are only two terms which deal with insurance, namely CIF and CIP. Under these terms the seller is obliged to procure insurance for the benefit of the buyer. In other cases it is for the parties themselves to decide whether and to what extent they want to cover themselves by insurance. Since the seller takes out insurance for the benefit of the buyer, he would not know the buyer's precise requirements. Under the Institute Cargo Clauses drafted by the Institute of London Underwriters, 9

10 insurance is available in «minimum cover» under Clause C, «medium cover» under Clause A and «most extended cover» under Clause A. Since in the sale of commodities under the CIF term the buyer may wish to sell the goods in transit to a subsequent buyer who in turn may wish to resell the goods again, it is impossible to know the insurance cover suitable to such subsequent buyers and, therefore, the minimum cover under CIF has traditionally been chosen with the possibility for the buyer to require the seller to take out additional insurance. Minimum cover is however unsuitable for sale of manufactured goods where the risk of theft, pilferage or improper handling or custody of the goods would require more than the cover available under Clause C. Since CIP, as distinguished from CIF, would normally not be used for the sale of commodities, it would have been feasible to adopt the most extended cover under CIP rather than the minimum cover under CIF. But to vary the seller's insurance obligation under CIF and CIP would lead to confusion and both terms therefore limit the seller's insurance obligation to the minimum cover. It is particularly important for the CIP-buyer to observe this: should additional cover be required, he should agree with the seller that the latter could take out additional insurance or, alternatively, arrange for extended insurance cover himself. There are also particular instances where the buyer may wish to obtain even more protection than is available under Institute Clause A, for example insurance against war, riots, civil commotion, strikes or other labour disturbances. If he wishes the seller to arrange such insurance he must instruct him accordingly in which case the seller would have to provide such insurance if procurable. 9.4 The «D»-terms are different in nature from the «C»-terms, since the seller according to the «D»- terms is responsible for the arrival of the goods at the agreed place or point of destination at the border or within the country of import. The seller must bear all risks and costs in bringing the goods thereto. Hence, the «D»-terms signify arrival contracts, while the «C»-terms evidence departure (shipment) contracts. Under the «D»-terms except DDP the seller does not have to deliver the goods cleared for import in the country of destination. Traditionally, the seller had the obligation to clear the goods for import under DEQ, since the goods had to be landed on the quay and thus were brought into the country of import. But owing to changes in customs clearance procedures in most countries, it is now more appropriate that the party domiciled in the country concerned undertakes the clearance and pays the duties and other charges. Thus, a change in DEQ has been made for the same reason as the change in FAS previously mentioned. As in FAS, in DEQ the change has been marked with capital letters in the preamble. It appears that in many countries trade terms not included in Incoterms are used particularly in railway traffic («franco border», «franco-frontiere», «Frei Grenze»). However, under such terms it is normally not intended that the seller should assume the risk of loss of or damage to goods during the transport up to the border. It would be preferable in these circumstances to use CPT indicating the border. If, on the other hand, the parties intend that the seller should bear the risk during the transport DAF indicating the border would be appropriate. The DDU term was added in the 1990 version of Incoterms. The term fulfils an important function whenever the seller is prepared to deliver the goods in the country of destination without clearing the goods for import and paying the duty. In countries where import clearance may be difficult and time consuming, it may be risky for the seller to undertake an obligation to deliver the goods beyond the customs clearance point. Although, according to DDU B5 and B6, the buyer would have to bear the additional risks and costs which might follow from his failure to fulfil his obligations to clear the goods for import, the seller is advised not to use the DDU term in countries where difficulties might be expected in clearing the goods for import. 10

11 10. THE EXPRESSION «NO OBLIGATION» As appears from the expressions «the seller must» and «the buyer must» Incoterms are only concerned with the obligations which the parties owe to each other. The words «no obligation» have therefore been inserted whenever one party does not owe an obligation to the other party. Thus, if for instance according to A3 of the respective term the seller has to arrange and pay for the contract of carriage we find the words «no obligation» under the heading «contract of carriage» in B3 a) setting forth the buyer's position. Again, where neither party owes the other an obligation, the words «no obligation» will appear with respect to both parties, for example, with respect to insurance. In either case, it is important to point out that even though one party may be under "no obligation" towards the other to perform a certain task, this does not mean that it is not in his interest to perform that task. Thus, for example, just because a CFR buyer owes his seller no duty to make a contract of insurance under B4, it is clearly in his interest to make such a contract, the seller being under no such obligation to procure insurance cover under A VARIANTS OF INCOTERMS In practice, it frequently happens that the parties themselves by adding words to an Incoterm seek further precision than the term could offer. It should be underlined that Incoterms give no guidance whatsoever for such additions. Thus, if the parties cannot rely on a well-established custom of the trade for the interpretation of such additions they may encounter serious problems when no consistent understanding of the additions could be proven. If for instance the common expressions «FOB stowed» or «EXW loaded» are used, it is impossible to establish aworld-wide understanding to the effect that the seller's obligations are extended not only with respect to the cost of actually loading the goods in the ship or on the vehicle respectively but also include the risk of fortuitous loss of or damage to the goods in the process of stowage and loading. For these reasons, the parties are strongly advised to clarify whether they only mean that the function or the cost of the stowage and loading operations should fall upon the seller or whether he should also bear the risk until the stowage and loading has actually been completed. These are questions to which Incoterms do not provide an answer: consequently, if the contract too fails expressly to describe the parties' intentions, the parties may be put to much unnecessary trouble and cost. Although Incoterms 2000 do not provide for many of these commonly used variants, the preambles to certain trade terms do alert the parties to the need for special contractual terms if the parties wish to go beyond the stipulations of Incoterms. EXW - Добавляется обязанность продавца погрузить товар на транспортное средство покупателя CIF/CIP - Покупатель нуждается в дополнительном страховании 11

12 DEQ - Добавляется обязанность продавца оплатить расходы после разгрузки In some cases sellers and buyers refer to commercial practice in liner and charter party trade. In these circumstances, it is necessary to clearly distinguish between the obligations of the parties under the contract of carriage and their obligations to each other under the contract of sale. Unfortunately, there are no authoritative definitions of expressions such as «liner terms» and «terminal handling charges» (THC). Distribution of costs under such terms may differ in different places and change from time to time. The parties are recommended to clarify in the contract of sale how such costs should be distributed between themselves. Expressions frequently used in charterparties, such as «FOB stowed», «FOB stowed and trimmed», are sometimes used in contracts of sale in order to clarify to what extent the seller under FOB has to perform stowage and trimming of the goods onboard the ship. Where such words are added, it is necessary to clarify in the contract of sale whether the added obligations only relate to costs or to both costs and risks. As has been said, every effort has been made to ensure that Incoterms reflect the most common commercial practice. However in some cases - particularly where Incoterms 2000 differ from Incoterms the parties may wish the trade terms to operate differently. They are reminded of such options in the preamble of the terms signalled by the word «However». 12. CUSTOMS OF THE PORT OR OF A PARTICULAR TRADE Since Incoterms provide a set of terms for use in different trades and regions it is impossible always to set forth the obligations of the parties with precision. To some extent it is therefore necessary to refer to the custom of the port or of the particular trade or to the practices which the parties themselves may have established in their previous dealings (cf. article 9 of the 1980 United Nations Convention on Contracts for the International Sale of Goods). It is of course desirable that sellers and buyers keep themselves duly informed of such customs when they negotiate their contract and that, whenever uncertainty arises, they clarify their legal position by appropriate clauses in their contract of sale. Such special provisions in the individual contract would supersede or vary anything that is set forth as a rule of interpretation in the various Incoterms. 13. THE BUYER'S OPTIONS ASTOTHE PLACE OF SHIPMENT In some situations, it may not be possible at the time when the contract of sale is entered into to decide precisely on the exact point or even the place where the goods should be delivered by the seller for carriage. For instance reference might have been made at this stage merely to a «range» or to a rather large place, for example, seaport, and it is then usually stipulated that the buyer has the right or duty to name later on the more precise point within the range or the place. If the buyer has a duty to name the precise point as aforesaid his failure to do so might result in liability to bear the risks and additional costs resulting from such failure (B5/B7 of all terms). In addition, the buyer's failure to use his right to indicate the point may give the seller the right to select the point which best suits his purpose (FCA A4). 14. CUSTOMS CLEARANCE The term «customs clearance» has given rise to misunderstandings. Thus, whenever reference is made to an obligation of the seller or the buyer to undertake obligations in connection with passing the goods through customs of the country of export or import it is now made clear that this obligation does not only include the payment of duty and other charges but also the performance and payment of 12

13 whatever administrative matters are connected with the passing of the goods through customs and the information to the authorities in this connection. Further, it has - although quite wrongfully - been considered in some quarters inappropriate to use terms dealing with the obligation to clear the goods through customs when, as in intra-european Union trade or other free trade areas, there is no longer any obligation to pay duty and no restrictions relating to import or export. In order to clarify the situation, the words «where applicable» have been added in the A2 and B2, A6 and B6 clauses of the relevant Incoterms in order for them to be used without any ambiguity where no customs procedures are required. It is normally desirable that customs clearance is arranged by the party domiciled in the country where such clearance should take place or at least by somebody acting there on his behalf. Thus, the exporter should normally clear the goods for export, while the importer should clear the goods for import. Incoterms 1990 departed from this under the trade terms EXW and FAS (export clearance duty on the buyer) and DEQ (import clearance duty on the seller) but in Incoterms 2000 FAS and DEQ place the duty of clearing the goods for export on the seller and to clear them for import on the buyer respectively, while EXW -representing the seller's minimum obligation - has been left unamended (export clearance duty on the buyer). Under DDP the seller specifically agrees to do what follows from the very name of the term - Delivered Duty Paid - namely to clear the goods for import and pay any duty as a consequence thereof. 15. PACKAGING In most cases, the parties would know beforehand which packaging is required for the safe carriage of the goods to destination. However, since the seller's obligation to pack the goods may well vary according to the type and duration of the transport envisaged, it has been felt necessary to stipulate that the seller is obliged to pack the goods in such a manner as is required for the transport, but only to the extent that the circumstances relating to the transport are made known to him before the contract of sale is concluded (cf. articles and 35.2.b. of the 1980 United Nations Convention on Contracts for the International Sale of Goods where the goods, including packaging, must be «fit for any particular purpose expressly or impliedly made known to the seller at the time of the conclusion of the contract, except where the circumstances show that the buyer did not rely, or that it was unreasonable for him to rely, on the seller's skill and judgement»). 16. INSPECTION OF GOODS In many cases, the buyer may be well advised to arrange for inspection of the goods before or at the time they are handed over by the seller for carriage (so-called pre-shipment inspection or PSI). Unless the contract stipulates otherwise, the buyer would himself have to pay the cost for such inspection that is arranged in his own interest. However, if the inspection has been made in order to enable the seller to comply with any mandatory rules applicable to the export of the goods in his own country, the seller would have to pay for that inspection, unless the EXW term is used, in which case the costs of such inspection are for the account of the buyer. 17. MODE OF TRANSPORT AND THE APPROPRIATE INCOTERM 2000 Any mode of transport Group E EXW Ex Works (... named place) Group F FCA Free Carrier (... named place) 13

14 Group C CPT Carriage Paid To (... named place of destination) CIP Carriage and Insurance Paid To (... named place of destination) Group D DAF Delivered At Frontier (... named place) DDU Delivered Duty Unpaid (... named place of destination) DDP Delivered Duty Paid (... named place of destination) Maritime and inland waterway transport only Group F FAS Free Alongside Ship (... named port of shipment) FOB Free On Board (... named port of shipment) Group C CFR Cost and Freight (... named port of destination) CIF Cost, Insurance and Freight (... named port of destination) Group D DES DES Delivered Ex Ship (... named port of destination) DEQ Delivered Ex Quay (... named port of destination) 18. THE RECOMMENDED USE In some cases the preamble recommends the use or non-use of a particular term. This is particularly important with respect to the choice between FCA and FOB. Regrettably, merchants continue to use FOB when it is totally out of place thereby causing the seller to incur risks subsequent to the handing over of the goods to the carrier named by the buyer. FOB is only appropriate to use where the goods are intended to be delivered «across the ship's rail» or, in any event, to the ship and not where the goods are handed over to the carrier for subsequent entry into the ship, for example stowed in containers or loaded on lorries or wagons in so-called roll on - roll off traffic. Thus, a strong warning has been made in the preamble of FOB that the term should not be used when the parties do not intend delivery across the ship's rail. It happens that the parties by mistake use terms intended for carriage of goods by sea also when another mode of transport is contemplated. This may put the seller in the unfortunate position that he cannot fulfil his obligation to tender the proper document to the buyer (for example a bill of lading, sea waybill or the electronic equivalent). The chart printed at paragraph 17 above makes clear which trade term in Incoterms 2000 it is appropriate to use for which mode of transport. Also, it is indicated in the preamble of each term whether it can be used for all modes of transport or only for carriage of goods by sea. 19. THE BILL OF LADING AND ELECTRONIC COMMERCE Traditionally, the on board bill of lading has been the only acceptable document to be presented by the seller under the CFR and CIF terms. The bill of lading fulfils three important functions, namely: proof of delivery of the goods on board the vessel; evidence of the contract of carriage; and a means of transferring rights to the goods in transit to another party by the transfer of the paper document to him. Transport documents other than the bill of lading would fulfil the two first-mentioned functions, but 14

Incoterms. ICC Official Rules for the Interpretation of Trade Terms. Entry into Force 1st January 2000

Incoterms. ICC Official Rules for the Interpretation of Trade Terms. Entry into Force 1st January 2000 Incoterms 2000 ICC Official Rules for the Interpretation of Trade Terms Entry into Force 1st January 2000 CONTENTS Foreword 4 Introduction 5 Incoterms 2000 EXW EX WORKS 27 (... named place) FCA FREE CARRIER

More information

C. ICC INCOTERMS 2000: Report of the Secretary-General (A/CN.9/479) [Original: English]

C. ICC INCOTERMS 2000: Report of the Secretary-General (A/CN.9/479) [Original: English] Part Two. Studies and reports on specific subjects 599 i(i) upon issue of a certificate of Default by a third party (who may without limitation be an independent architect or engineer or a Pre-Arbitral

More information

APPENDIX V: INTERNATIONAL COMMERCIAL TERMS (INCO)

APPENDIX V: INTERNATIONAL COMMERCIAL TERMS (INCO) APPENDIX V: INTERNATIONAL COMMERCIAL TERMS (INCO) INCOTERMS (INternational COmmercial Terms) 2000, published by the International Chamber of Commerce (2000 pub 560), are the most commonly accepted terms

More information

INCOTERMS 2000 EX WORKS (EXW)

INCOTERMS 2000 EX WORKS (EXW) INCOTERMS 2000 The purpose of Incoterms 2000 is to provide a set of international rules for the interpretation of the most commonly used trade terms in foreign trade. Thus, the uncertainties of different

More information

The 13 Incoterms - FAQs about the basics

The 13 Incoterms - FAQs about the basics The 13 Incoterms - FAQs about the basics Why Incoterms? Incoterms are international rules that are accepted by governments, legal authorities and practitioners worldwide for the interpretation of the most

More information

INCOTERMS 2010 AN INTRODUCTION

INCOTERMS 2010 AN INTRODUCTION AN INTRODUCTION 1 Copyright CargocandisFürst WHAT THEY ARE Incoterms is an abbreviation of International Commercial Terms Incoterms are published by the International Chamber of Commerce First published

More information

DSV Air & Sea Inc. Incoterms 2010 Introduction Guidelines

DSV Air & Sea Inc. Incoterms 2010 Introduction Guidelines DSV Air & Sea Inc. Incoterms 2010 Introduction Guidelines Contents Section Page 1 What do I need to know about Incoterms 2010? 3 2 What is Incoterms 2010 and how does it differ from Incoterms 2000? 4 3

More information

CFR (CNF/C&F) (Cost and Freight) has a long history in the INCOTERMS.

CFR (CNF/C&F) (Cost and Freight) has a long history in the INCOTERMS. Incoterms - CFR/CIF CFR (CNF/C&F) (Cost and Freight) has a long history in the INCOTERMS. As an INCOTERM, seller passes the risk to the buyer when the cargo crosses the ship's rail at the port of origin.

More information

INCO Terms. The seven rules defined by Incoterms 2010 for any mode(s) of transportation are:

INCO Terms. The seven rules defined by Incoterms 2010 for any mode(s) of transportation are: INCO Terms INCO Terms The seven rules defined by Incoterms 2010 for any mode(s) of transportation are: EXW: Ex Works (named place of delivery) The seller makes the goods available at its premises. This

More information

Incoterms 2010 Workshop. November 2010

Incoterms 2010 Workshop. November 2010 Incoterms 2010 Workshop AGENDA Introduction to the International Trade Terms Trade Terms: EXW; FCA; FAS; FOB; CFR; CIF Trade Terms: CPT; CIP; DAT; DAP;DDP Important Notes on Obligations, Risks and Exposure

More information

Incoterms Incoterms EXW ex works Seller ex works ex factory ex mill ex plant ex refinery ex site ex warehouse EXW

Incoterms Incoterms EXW ex works Seller ex works ex factory ex mill ex plant ex refinery ex site ex warehouse EXW INCOTERMS Incoterms, promulgated by the International Chamber of Commerce, is an acronym for International commercial terms, and provide a standard set of definitions for trade terms (also known as delivery

More information

TRADE AFRICA Trade Promotion Program

TRADE AFRICA Trade Promotion Program Incoterms 2000 In their sells contract the seller (exporter) and the buyer agree on the conditions of sale: payment on the one hand, delivery on the other. These terms determine at what precise moment

More information

INCO Terms LIBERTY-TERMINALS.COM INDEX

INCO Terms LIBERTY-TERMINALS.COM INDEX 2055 Col. Cole Drive Post Office Box 2775 Georgetown, SC 29442 U.S.A. Phone: (+1 843-527-3552 Fax: +1 843-527-3554 Email: managament@liberty-terminals.com INCO Terms INDEX Ex Works (EXW)... 2 Free Carrier

More information

ICC Guide to Incoterms 2010. By Jan Ramberg

ICC Guide to Incoterms 2010. By Jan Ramberg ICC Guide to Incoterms 2010 By Jan Ramberg 33-43AvenueduPrésidentWilson 75116Paris,France 978-92-842-0226-3 Contents Introduction 7 The evolution of the Incoterms rules from 1936 to 2010 8 The ICC Model

More information

EXW (insert named place of delivery) Incoterms 2010

EXW (insert named place of delivery) Incoterms 2010 RULES FOR ANY MODE OR MODES OF TRANSPORT EX WORKS EXW (insert named place of delivery) Incoterms 2010 GUIDANCE NOTE This rule may be used irrespective of the mode of transport selected and may also be

More information

INCOTERMS 2010. International Commercial Terms by the ICC (International chamber of commerce)

INCOTERMS 2010. International Commercial Terms by the ICC (International chamber of commerce) INCOTERMS 2010 International Commercial Terms by the ICC (International chamber of commerce) Who is responsible and has to pay the damage/loss?? PURPOSE OF INCOTERMS To provide a set of international

More information

10. Incoterms The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International

10. Incoterms The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International 10. Incoterms The Incoterms rules or International Commercial Terms are a series of pre-defined commercial terms published by the International Chamber of Commerce (ICC) that are widely used in International

More information

INCOTERMS IN TWO MAJOR GROUPS

INCOTERMS IN TWO MAJOR GROUPS INCOTERMS IN TWO MAJOR GROUPS Incoterms has become a famous term in the international freight world. In fact it is a word that is copyrighted by the International Chamber of Commerce (ICC). Following some

More information

Logistically Speaking: Using Delivery Terms to Allocate Supply Chain Risks

Logistically Speaking: Using Delivery Terms to Allocate Supply Chain Risks Logistically Speaking: Using Delivery Terms to Allocate Supply Chain Risks Allen L. Anderson, Lawyer FEES & BURGESS, P.C. 256/536-0095; anderson@feesburgess.com Jeffrey L. Roth, Lawyer FEES & BURGESS,

More information

Australian Customs Cargo Advice

Australian Customs Cargo Advice Australian Cargo Advice Incoterms 2010 Number 2010/13 This notice is to advise that the International Chamber of Commerce (ICC) has revised Incoterms 2000 to reflect changes in international and domestic

More information

CIP Carriage & Insurance Paid To

CIP Carriage & Insurance Paid To CIP Carriage & Insurance Paid To Carriage and Insurance paid to means that the seller delivers the goods to the carrier nominated by him but the seller must in addition pay the cost of carriage necessary

More information

INCOTERMS 2010 INTERNATIONAL COMMERCIAL TERMS

INCOTERMS 2010 INTERNATIONAL COMMERCIAL TERMS INCOTERMS 2010 INTERNATIONAL COMMERCIAL TERMS (CONTRACT OF SALE) Incoterms Key elements of international contracts of sale. They tell the parties what to do with respect to carriage of the goods from buyer

More information

How To Sell Goods In The Uk

How To Sell Goods In The Uk Local National International Quick Reference Guide to Incoterms 2010 Overview The Incoterms rules are an internationally recognized standard and are used worldwide in international and domestic contracts

More information

Incoterms 2010. General mode of transportation

Incoterms 2010. General mode of transportation Incoterms 2010 The eighth published set of pre-defined terms, Incoterms 2010 defines 11 rules, reducing the 13 used in Incoterms 2000 by introducing two new rules ("Delivered at Terminal", DAT; "Delivered

More information

Incoterms 2000. SCA Transforest

Incoterms 2000. SCA Transforest Incoterms 2000 SCA Transforest EXW Ex works at the buyers disposal at agreed place and time the time the goods are placed at buyers disposal at agreed place and time Bear all costs until at buyers disposal

More information

INCOTERMS 2010 INDEX

INCOTERMS 2010 INDEX CHAPTER 30 INCOTERMS 2010 1 CHAPTER 30 INCOTERMS 2010 INDEX Para No TOPIC Page No 30 Introduction 3 30 1 EX Works (EXW) 4 30 2 Free Carrier (FCA) 4 30 3 Free Alongside Ship (FAS) 5 30 4 Free on Board (FOB)

More information

Article 7 - Incoterms

Article 7 - Incoterms Article 7 - Incoterms Incoterms 2000 have been updated by Incoterms 2010 and therefore the old post below is now redundant.. Please read the analysis about Incoterms 2010 here.. -------------------------------------------------------------------------------------------------------------------------------

More information

INTERNATIONAL TRADE FLOW DIAGRAMS

INTERNATIONAL TRADE FLOW DIAGRAMS The structure of Incoterms (Copyright INCOTERMS) : Group E Departure Main Carriage Unpaid Group C : Main Carriage Paid Arrival : EXW Ex Works (... named place) FCA Free Carrier (... named place) FAS Free

More information

World Trade Practices Chapter 14 FCL= full container load LCL= less than full container load (door to door)

World Trade Practices Chapter 14 FCL= full container load LCL= less than full container load (door to door) Logistics Containerized Cargo Twenty-Foot Equivalent Units (intermodal shipping container) 1 TEU 20 long container 2 TEUs per 40 long container World Trade Practices Chapter 14 FCL= full container load

More information

CONTENTS. E TERMS Departure Terms EXW Ex Works (... named place of delivery)... 6

CONTENTS. E TERMS Departure Terms EXW Ex Works (... named place of delivery)... 6 2 World Trade Press World Trade Press Illustrated Guide to Incoterms 2010* 800 Lindberg Lane, Suite 190 Petaluma, California 94952 USA Tel: +1 (707) 778-1124 x 3 Fax: +1 (707) 778-1329 www.worldtradepress.com

More information

Incoterms 2010. The latest update of the Incoterms have entered into force on 01 January 2011, known as Incoterms 2010

Incoterms 2010. The latest update of the Incoterms have entered into force on 01 January 2011, known as Incoterms 2010 The latest update of the Incoterms have entered into force on 01 January 2011, known as Incoterms 2010 The valid Incoterms as from 01 January 2010:- 1. EXW = Ex Works / all modes 2. FCA = Free Carrier

More information

DDP Delivered Duty Paid

DDP Delivered Duty Paid 1 DDP Delivered Duty Paid Delivered Duty Paid means that the seller delivers the goods to the buyer, cleared for import, and not unloaded from any arriving means of transport at the named place of destination.

More information

INCOTERMS 2010 ANY MODE OF TRANSPORT. EXW (insert named place of delivery) Incoterms 2010

INCOTERMS 2010 ANY MODE OF TRANSPORT. EXW (insert named place of delivery) Incoterms 2010 EXW (insert named place of delivery) Incoterms 2010 EXW The only responsibility of the seller is to places the goods at the disposal of the buyer at the seller s premises or at the named place. The buyer

More information

"Cost and Freight " means that the seller delivers when the goods rail in the port of shipment.

Cost and Freight  means that the seller delivers when the goods rail in the port of shipment. - CFR - CIF - CIP - CPT - DAF - DDU - DDP - DEQ - DES - EXW - FAS - FCA - FOB CFR COST AND FREIGHT (...named port of destination) "Cost and Freight " means that the seller delivers when the goods rail

More information

International Terms of Sale: Incoterms Webinar. Miller & Company P.C. Charles W. Ballard Kansas City, Missouri June 14, 2012

International Terms of Sale: Incoterms Webinar. Miller & Company P.C. Charles W. Ballard Kansas City, Missouri June 14, 2012 International Terms of Sale: Incoterms Webinar Miller & Company P.C. Charles W. Ballard Kansas City, Missouri June 14, 2012 What are Incoterms? Incoterms are internationally agreed-upon definitions for

More information

International Chamber of Commerce (ICC)

International Chamber of Commerce (ICC) International Chamber of Commerce (ICC) Peak representative world business organization Established 1919 Fundamental mission is to promote trade and investment across frontiers and help business corporations

More information

What are Incoterms? Any mode of transport: Sea and inland waterway transport (only): CIP - Carriage and Insurance Paid

What are Incoterms? Any mode of transport: Sea and inland waterway transport (only): CIP - Carriage and Insurance Paid What are Incoterms? International Commerce Terms (Incoterms) are an internationally recognised standard trade terms that set out buyer and seller responsibilities. Incoterms are maintained and developed

More information

FCA Free Carrier(...named place) Seller Seller Seller Seller. Seller Seller Seller Seller. Seller Seller Seller Seller

FCA Free Carrier(...named place) Seller Seller Seller Seller. Seller Seller Seller Seller. Seller Seller Seller Seller E/F Group E (Departure) EXW Exworks (...named place) FCA Free Carrier(...named place) Group F (Main Carriage Not Paid By Seller) FAS Free Alongside Ship(...named of shipment) Free On Board(...named of

More information

WHAT INCOTERMS 2010 RULES ARE

WHAT INCOTERMS 2010 RULES ARE INCOTERMS NOTES WHAT INCOTERMS 2010 RULES ARE 11 terms of shipment and delivery provided by the International Chamber of Commerce for use in contracts for the business-to-business sales/purchases of tangible,

More information

DLC :Documentary Letter of Credit - Issued and guaranteed by the bank for the full amount of the contract, each shipment paid seperately.

DLC :Documentary Letter of Credit - Issued and guaranteed by the bank for the full amount of the contract, each shipment paid seperately. Financial Instruments TRADE DICTIONARY COMMONLY USED TRADING TERMS LC : Letter of Credit - ICC UCP500 guidelines. DLC :Documentary Letter of Credit - Issued and guaranteed by the bank for the full amount

More information

A Guide to the new Incoterms 2010 (effec7ve as of 01/01/2011)

A Guide to the new Incoterms 2010 (effec7ve as of 01/01/2011) A Guide to the new Incoterms 2010 (effec7ve as of 01/01/2011) Who pays for what? Goods move across interna7onal borders because there has been a sale involving: Seller Buyer Contract of sale should define

More information

INCOTERMS 2015. The current set of Incoterms is Incoterms 2010. A copy of the full terms is available from the International Chamber of Commerce.

INCOTERMS 2015. The current set of Incoterms is Incoterms 2010. A copy of the full terms is available from the International Chamber of Commerce. INCOTERMS 2015 An overview International Commercial Terms ( Incoterms ) are internationally recognized standard trade terms used in sales contracts. They re used to make sure buyer and seller know: Who

More information

Incoterms. This guideline is also posted on the UNOPS intranet: Main Page Practices Procurement How to guides

Incoterms. This guideline is also posted on the UNOPS intranet: Main Page Practices Procurement How to guides Incoterms This guideline is also posted on the UNOPS intranet: Main Page Practices Procurement How to guides Organizational Effectiveness Centre 20 ecember 2006 Contents 1 WHAT ARE INCOTERMS... 2 2 WHAT

More information

Diagram: International Commercial Terms

Diagram: International Commercial Terms Diagram: International Commercial Terms INTERNATIONAL COMMERCIAL TERMS EXW FAS FCA FOB CFR CIF CIP CPT DAF DDP DDU DEQ DES Ex Works Free Alongside Ship Free Carrier Free On Board Cost and Freight (The

More information

INTERNATIONAL SHIPPING POLICY 2012

INTERNATIONAL SHIPPING POLICY 2012 INTERNATIONAL SHIPPING POLICY 2012 The following is a checklist of information that must be listed on any International Purchase Order before it is accepted and processed. Name and invoicing address of

More information

CIF Cost, Insurance & Freight

CIF Cost, Insurance & Freight CIF Cost, Insurance & Freight Cost, Insurance and Freight means that the seller delivers when the goods pass the ship's rail in the port of shipment. The seller must pay the costs and freight necessary

More information

CERTIFIED EXPORT SPECIALIST (CES) Case Study #005 Incoterms 2010 Study Material & Quiz

CERTIFIED EXPORT SPECIALIST (CES) Case Study #005 Incoterms 2010 Study Material & Quiz CERTIFIED EXPORT SPECIALIST (CES) Case Study #005 Incoterms 2010 Study Material & Quiz Incoterms 2010 Study Material Incoterms 2010 Rules International Commercial Terms (Incoterms ) are terms designed

More information

New Incoterms Rules in effect January 1, 2011 / Adv. Dan Zaum*

New Incoterms Rules in effect January 1, 2011 / Adv. Dan Zaum* New Incoterms Rules in effect January 1, 2011 / Adv. Dan Zaum* Export transactions generally involve international sales contracts, whose clarity of terms is crucial to avoiding disputes between parties.

More information

A Brief Introduction to Logistics

A Brief Introduction to Logistics A Brief Introduction to Logistics A Brief Introduction to Logistics The international freight market has a wealth and variety of transport providers to meet the needs of international trading companies

More information

Introduction to Incoterms 2010. May 17, 2012

Introduction to Incoterms 2010. May 17, 2012 Introduction to Incoterms 2010 May 17, 2012 Incoterms 2010 Background Purpose General Notes Important changes for 2010 What Incoterms don t do What Incoterms aren t Recommended Usage Incoterm Groupings

More information

Introduction to Incoterms 2010. May 9, 2013

Introduction to Incoterms 2010. May 9, 2013 Introduction to Incoterms 2010 May 9, 2013 Presenter Theresa Sekula Manager, BDP Corporate Compliance Team Joined BDP in 2005, various roles including marine procurement, operations, and compliance roles

More information

Differences between 2000 and 2010 Incoterms

Differences between 2000 and 2010 Incoterms Want to start or grow your import/export business? Learn how from industry experts. View our training schedule Differences between 2000 and 2010 Incoterms Incoterms are revised periodically. he current

More information

Guidelines for Appropriations

Guidelines for Appropriations Reprinted 1 st September 2010 Guidelines for Appropriations Printed in England and issued by GAFTA THE GRAIN AND FEED TRADE ASSOCIATION 9 LINCOLN S INN FIELDS, LONDON WC2A 3BP E-mail Address: post@gafta.com

More information

A Practical Approach to Incoterms 2010. Presented By: Lori Koss, Logistics Supervisor for Carestream Health, Licensed US Customs Broker.

A Practical Approach to Incoterms 2010. Presented By: Lori Koss, Logistics Supervisor for Carestream Health, Licensed US Customs Broker. A Practical Approach to Incoterms 2010 Presented By: Lori Koss, Logistics Supervisor for Carestream Health, Licensed US Customs Broker. Carestream Health, 2014 p.2 2010 Incoterms Changes Goal was to simplify

More information

Transport insurance Guide

Transport insurance Guide Transport insurance Guide Whether you are buying or selling goods from or to the international market, there is always a risk that they may be damaged, lost or delayed in transit. Most people in the supply

More information

The INCOTERMS rules and their importance

The INCOTERMS rules and their importance The INCOTERMS rules and their importance Lecturer Ph.D. Candidate Anca LAZĂR 1 Abstract The content INCOTERMS are a set of rules that determine the rights and obligations of the international sales contract,

More information

Incoterms 2010 may be included in a sales contract if the parties desire the following:

Incoterms 2010 may be included in a sales contract if the parties desire the following: INCOTERMS 2010 USE OF INCOTERMS Incoterms are not laws enacted by governments. Rather, they are rules agreed to by parties to a contract. Also, Incoterms are not implied into contracts for the sale of

More information

Tamil Nadu Technology Development & Promotion Center

Tamil Nadu Technology Development & Promotion Center Financial Institutions in Food Business Day 3, Plenary Session I, 1000 Hrs-1115 Hrs, 19 th Dec 2009, MSME DI,Guindy, Chennai Presented By: H M Sathyamurthy Tamil Nadu Technology Development & Promotion

More information

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) [CISG]

UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) [CISG] UNITED NATIONS CONVENTION ON CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS (1980) [CISG] For U.S. citation purposes, the UN certified English text is published in 52 Federal Register 6262, 6264 6280 (March

More information

INTERNATIONAL TRADE FINANCE SERVICES

INTERNATIONAL TRADE FINANCE SERVICES INTERNATIONAL TRADE FINANCE SERVICES DOCUMENTARY LETTERS OF CREDIT A PRACTICAL GUIDE CONTENTS LETTERS OF CREDIT SIMPLY DEFINED.............................................2 BENEFITS OF A LETTER OF CREDIT...............................................3

More information

China International Freight Forwarders Association Trading Condition

China International Freight Forwarders Association Trading Condition China International Freight Forwarders Association Trading Condition 1. Definition In these Conditions, the following words and expressions have the following meanings unless and except as otherwise specifically

More information

GENERAL CONDITIONS OF LATVIAN NATIONAL ASSOCIATION OF FREIGHT FORWARDERS and LOGISTIC LAFF

GENERAL CONDITIONS OF LATVIAN NATIONAL ASSOCIATION OF FREIGHT FORWARDERS and LOGISTIC LAFF GENERAL CONDITIONS OF LATVIAN NATIONAL ASSOCIATION OF FREIGHT FORWARDERS and LOGISTIC LAFF Effective as of January 1, 2007 These conditions taking effect on January 1, 2007, have been agreed between the

More information

LOGISTICS EXPERIENCE CUTTING EDGE EXPERTISE

LOGISTICS EXPERIENCE CUTTING EDGE EXPERTISE LOGISTICS EXPERIENCE Unmatched knowledge and experience gives us the ability: to deliver vehicles safely to deliver vehicles efficiently to deliver vehicles cost-effectively to deliver vehicles to even

More information

The Training Material on Multimodal Transport Law and Operations has been produced under Project Sustainable Human Resource Development in Logistic

The Training Material on Multimodal Transport Law and Operations has been produced under Project Sustainable Human Resource Development in Logistic The Training Material on Multimodal Transport Law and Operations has been produced under Project Sustainable Human Resource Development in Logistic Services for ASEAN Member States with the support from

More information

MODEL CONTRACTS FOR SMALL FIRMS LEGAL GUIDANCE FOR DOING INTERNATIONAL BUSINESS

MODEL CONTRACTS FOR SMALL FIRMS LEGAL GUIDANCE FOR DOING INTERNATIONAL BUSINESS MODEL CONTRACTS FOR SMALL FIRMS LEGAL GUIDANCE FOR DOING INTERNATIONAL BUSINESS International Trade Centre, August 2010 Model Contracts for Small Firms: International Commercial Sale of Goods Contents

More information

Standard Conditions (1992) governing the FIATA MULTIMODAL TRANSPORT BILL OF LADING

Standard Conditions (1992) governing the FIATA MULTIMODAL TRANSPORT BILL OF LADING Standard Conditions (1992) governing the FIATA MULTIMODAL TRANSPORT BILL OF LADING Definitions «Freight Forwarder» means the Multimodal Transport Operator who issues this FBL and is named on the face of

More information

A GuiDe to DoCumentArY Business. Documentary Credits and Collections.

A GuiDe to DoCumentArY Business. Documentary Credits and Collections. A GuiDe to DoCumentArY Business. Documentary Credits and Collections. Contents. The Documentary Collection. Documentary collection process. 7 General information. 7 The collection order. 8 What you should

More information

Trade Rules of the National Hay Association U.S. FORAGE EXPORT COUNCIL

Trade Rules of the National Hay Association U.S. FORAGE EXPORT COUNCIL Trade Rules of the National Hay Association U.S. FORAGE EXPORT COUNCIL Adopted May 6, 2014 All Active members and other parties using these rules are free to agree upon any contractual provisions that

More information

Canada Export Requirements Incoterms

Canada Export Requirements Incoterms Canada Export Requirements Incoterms Topics of Discussion Canada export requirements Terms of sale Insurance Documentation Export Process Are there export restrictions? What are the import conditions?

More information

of: Frontier/Term inal/quay Shipm ent

of: Frontier/Term inal/quay Shipm ent Any mode of Seller/Exporter 'S RISKS 'S EXW of: D e s tin a tio n : RISKS B u ye r/ e r Ex Works 'S COSTS 'S COSTS EXW, Ex Works (...named place) In Ex Works, the seller/exporter/manufacturer merely makes

More information

A COMPARATIVE ANALYSIS OF THE HAGUE-VISBY RULES, THE HAMBURG RULES AND THE ROTTERDAM RULES

A COMPARATIVE ANALYSIS OF THE HAGUE-VISBY RULES, THE HAMBURG RULES AND THE ROTTERDAM RULES A COMPARATIVE ANALYSIS OF THE HAGUE-VISBY RULES, THE HAMBURG RULES AND THE ROTTERDAM RULES FRANCESCO BERLINGIERI * This comparative analysis will be divided in the following three parts: I. Matters regulated

More information

SHIPPER S GUIDE. 18/F., 9 Des Voeux Road West,Hong Kong TEL: (852) 2559 7911, FAX: (852) 2581 3336 www.sinotrans-logistics.com

SHIPPER S GUIDE. 18/F., 9 Des Voeux Road West,Hong Kong TEL: (852) 2559 7911, FAX: (852) 2581 3336 www.sinotrans-logistics.com SHIPPER S GUIDE Sinotrans (HK) Logistics Limited have rich experience in shipping agency and freight forwarding and gained a lot of support and advice from our customers in the pass. Nowadays, our services

More information

EXPORT CONTRACT TEMPLATE

EXPORT CONTRACT TEMPLATE EXPORT CONTRACT TEMPLATE An Export Contract is entered into between and exporter and an importer belonging to two different countries for selling and purchasing of goods. This contract is used for the

More information

Incoterms 2000. English. www.if.fi

Incoterms 2000. English. www.if.fi Incoterms 2000 English www.if.fi THE TRADE TERMS OF THE INTERNATIONAL CHAMBER OF COMMERCE WHAT IS A TRADE TERM? A trade term is a combination of letters or words, which specifies certain obligations within

More information

Company means Jupiter Global Ltd., a member of the Hong Kong Association of Freight Forwarding and Logistics Limited trading under these Conditions.

Company means Jupiter Global Ltd., a member of the Hong Kong Association of Freight Forwarding and Logistics Limited trading under these Conditions. CONDITIONS OF CONTRACT (AIR) Standard Trading Condition (1) Definitions: Ancillary Services includes services of arranging for the storage, warehousing, collection, delivery, local transportation, insurance,

More information

DUIF S FLORIST ARTICLES B.V.

DUIF S FLORIST ARTICLES B.V. General Terms and Conditions of Sale and Delivery of DUIF S FLORIST ARTICLES B.V. having its registered office in Aalsmeer, the Netherlands, and principal place of business at Legmeerdijk 281 in (1432

More information

FIATA Position on the UN Convention on Contracts for the International Carriage of Goods wholly or partly by Sea (the Rotterdam Rules ).

FIATA Position on the UN Convention on Contracts for the International Carriage of Goods wholly or partly by Sea (the Rotterdam Rules ). Doc. MTI/507 Annex II FIATA Position on the UN Convention on Contracts for the International Carriage of Goods wholly or partly by Sea (the Rotterdam Rules ). FIATA Working Group Sea Transport recommends

More information

FRAMEWORK AGREEMENT For Supply of Tarpaulins / plastic sheeting for World Vision International disaster response

FRAMEWORK AGREEMENT For Supply of Tarpaulins / plastic sheeting for World Vision International disaster response FRAMEWORK AGREEMENT For Supply of Tarpaulins / plastic sheeting for World Vision International disaster response THIS FRAMEWORK AGREEMENT ("Agreement"), entered into on, by and between: [SUPPLIER NAME]

More information

Financial Instruments

Financial Instruments There are two basic forms of Letters of Credit: Standby (SBLC) and Documentary (DLC). Financial Instruments Documentary Letters of Credit can be either Revocable or Irrevocable, although the first is extremely

More information

SHIPBROKING AND CHARTERING PRACTICE

SHIPBROKING AND CHARTERING PRACTICE SHIPBROKING AND CHARTERING PRACTICE By LARS GORTON Professor of Banking Law at the University of Lund Professor Adjunct of International Business Law, Stockholm School of Economics PATRICK HILLENIUS Shipbroker

More information

Infineon Technologies North America Corp. Terms and Conditions of Sale

Infineon Technologies North America Corp. Terms and Conditions of Sale Infineon Technologies North America Corp. Terms and Conditions of Sale 1. GENERAL 1.1 Contract Terms. These Terms and Conditions of Sale (the Agreement ) shall apply to any offer made by Infineon Technologies

More information

GENERAL TERMS OF PURCHASE of Globe Chemicals GmbH valid for contracts with merchants effective May 1 st, 2005

GENERAL TERMS OF PURCHASE of Globe Chemicals GmbH valid for contracts with merchants effective May 1 st, 2005 GENERAL TERMS OF PURCHASE of Globe Chemicals GmbH valid for contracts with merchants effective May 1 st, 2005 1. General 1.1 The terms of purchase set out below are valid for all also future purchases

More information

TLIL5063A Review contracts, insurance, risk and liability in the international freight forwarding context

TLIL5063A Review contracts, insurance, risk and liability in the international freight forwarding context TLIL5063A Review contracts, insurance, risk and liability in the international freight forwarding context Release: 1 TLIL5063A Review contracts, insurance, risk and liability in the international freight

More information

1.1 The contract shall be deemed to have been entered into upon receipt of supplier s written acknowledgement stating its acceptance of the order.

1.1 The contract shall be deemed to have been entered into upon receipt of supplier s written acknowledgement stating its acceptance of the order. Kendrion (Switzerland) AG Albisstrasse 26 CH-8915 Hausen am Albis of Contract (Rev. 1, valid from 01.01.2013) 1 General 1.1 The contract shall be deemed to have been entered into upon receipt of supplier

More information

Negotiating with Your Supplier: Terms to Protect Your Company. Empower Your Supply Chain Seminar

Negotiating with Your Supplier: Terms to Protect Your Company. Empower Your Supply Chain Seminar 6 Negotiating with Your Supplier: Terms to Protect Your Company What are Incoterms? 11 Terms of shipment and delivery for use in contracts for B2B sales/purchase goods Developed by the International Chamber

More information

ABBREVIATIONS OF INCOTERMS Alphabetic Code for Incoterms 2000

ABBREVIATIONS OF INCOTERMS Alphabetic Code for Incoterms 2000 UNITED NATIONS ECONOMIC COMMISSION FOR EUROPE ABBREVIATIONS OF INCOTERMS Alphabetic Code for Incoterms 2000 RECOMMENDATION No. 5, fourth edition, adopted by the United Nations Centre for Trade Facilitation

More information

TENDER DOCUMENTS PROCUREMENT OF GOODS PRICE QUOTATIONS. Public Procurement Board. Accra, Ghana

TENDER DOCUMENTS PROCUREMENT OF GOODS PRICE QUOTATIONS. Public Procurement Board. Accra, Ghana TENDER DOCUMENTS PROCUREMENT OF GOODS PRICE QUOTATIONS Public Procurement Board Accra, Ghana October 2003 i Table Contents Table Contents... i Introduction and Instructions... 1 Section I. Invitation for

More information

Circular to Assureds (no 007 2010) Background

Circular to Assureds (no 007 2010) Background Subject: Sanctions Circular to Assureds (no 007 2010) Background Assureds will be aware that there are currently significant complications involved in trading with Iran or Iranian interests. From a charterers

More information

Export Essentials: Export Pricing, Quoting & Terms of Sale

Export Essentials: Export Pricing, Quoting & Terms of Sale Export Essentials: Export Pricing, Quoting & Terms of Sale Food Export Association of the Midwest USA & Food Export USA -Northeast Food Export Marketing Forum September 29 th, 2010 Chicago Illinois Agenda

More information

GUIDELINES FOR THE IMMEDIATE RELEASE OF CONSIGNMENTS BY CUSTOMS

GUIDELINES FOR THE IMMEDIATE RELEASE OF CONSIGNMENTS BY CUSTOMS GUIDELINES FOR THE IMMEDIATE RELEASE OF CONSIGNMENTS BY CUSTOMS 1. Introduction 1.1. In recent decades business has seized on information technology to exploit such innovative transport initiatives as

More information

The Law of International Trade

The Law of International Trade The Law of International Trade by Ademuni-Odeke BLACKSTONE PRESS LIMITED Contents Preface Acknowledgements TableofCases Table of Statutes Table of Statutory Instruments Table of Conventions Table of Abbreviations

More information

ECG Standard Shipping Terms

ECG Standard Shipping Terms ECG Standard Shipping Terms Version 1, September 2011 This document has been prepared by the ECG Maritime & Ports Commission and it is also available on the ECG website (www.ecgassociation.eu) The ECG

More information

EASY LED Oy General Terms of Sale

EASY LED Oy General Terms of Sale EASY LED Oy General Terms of Sale 1. Scope of application These General Terms of Sale (hereinafter referred to as the Terms ) shall be applied to the sale and supply of lighting products manufactured by

More information

Terms & Conditions - Warehouse & Storage

Terms & Conditions - Warehouse & Storage Terms & Conditions - Warehouse & Storage TWI Group Inc. 1. Agreement to Terms and Conditions. It is agreed that Company s Warehouse Receipt Terms and Conditions shall govern the dealings between Company

More information

Multimodal Transport Operator s Liability Insurance Policy

Multimodal Transport Operator s Liability Insurance Policy (Translation) Multimodal Transport Operator s Liability Insurance Policy Definitions The meanings of the terms defined in this Section shall bear the same meanings wherever they shall appear in this Policy,

More information

BUYING AGENCY AGREEMENT

BUYING AGENCY AGREEMENT THIS AGREEMENT ( Agreement ) is made this day of, 20xx, by and between, with its principal place of business at referred to hereinafter as Buyer, and, with its principal office at, hereinafter referred

More information

Sale of Goods (Vienna Convention) Act 1986

Sale of Goods (Vienna Convention) Act 1986 Version: 1.4.1989 South Australia Sale of Goods (Vienna Convention) Act 1986 An Act to give effect within South Australia to the United Nations Convention on Contracts for the International Sale of Goods;

More information

General conditions of the Nordic association of freight forwarders

General conditions of the Nordic association of freight forwarders General conditions of the Nordic association of freight forwarders Effective as of January 2016 These Conditions will enter into effect as of January 1st, 2016 and are the result of negotiations between

More information

MARINE INSURANCE GUIDELINES

MARINE INSURANCE GUIDELINES MARINE INSURANCE GUIDELINES What is Marine Insurance? Marine Insurance, is a contract whereby for a consideration stipulated to be paid by one interested in a ship or cargo that is subject to the risks

More information

Fruit Juice Market - 04 April 2014

Fruit Juice Market - 04 April 2014 Fruit Juice Market - 04 April 2014 OVERVIEW: The fruit juice market is presently in a fairly quiet phase largely due to flat demand. Supply is generally reported to be regular with the exceptions of peach

More information